Cash crunch: Prepaid mobile recharge volume dips

After demonetisation, retail outlets dealing in recharge vouchers and electronic top-ups across metros had seen volumes plunge by as much as 80%.

The cash shortage in some parts of the country led to a 5-10 per cent dip in the volume of mobile prepaid recharges, said some telco distributors, who cautioned that the impact could grow to 20-25 per cent if the matter is not resolved quickly.

However, mobile phone operators haven’t seen much of an adverse effect so far but are closely watching the situation. They said there has been a significant increase in digital modes of recharges, which should help avert a revenue disruption of the magnitude they reported after the demonetisation of November 2016, even if the present cash crunch persists. Telcos are urging customers to pay digitally and top-up their accounts.

An estimated 96 per cent of India’s mobile customers subscribe to pay-and-use services, which is primarily a cash-driven business.

“The present impact is nowhere like the grim situation post-demonetisation, but there is definitely a 5-10 per cent dip in footfalls for prepaid recharges over the past few days amid the cash shortage and the situation could get worse if the problem lingers, translating in bigger business losses,” an Airtel distributor, who did not wish to be identified, told ET.

“I feel that it is unnecessary hype which has been created. Finance secretary and RBI have said that there is no cash crunch in 80 per cent of the ATMs and there is enough cash available… It is a political conspiracy to mislead nation. People should remain cautious,” Sinha said in New Delhi.

After demonetisation, retail outlets dealing in recharge vouchers and electronic top-ups across metros had seen volumes plunge by as much as 80%.

A senior Idea Cellular executive said the Kumar Birla-led operator “is closely monitoring the cash shortage situation and its implications,” adding that the company has “a multitude of digital platforms, including its website, the MyIdea app and the online recharge option for prepaid users to make payments and stay connected.”

A top executive of another Big 3 telco said the company always encourages customers to use digital platforms for electronic payments and does not foresee any significant hit to its prepaid recharge business.

“It’s too early for us to comment on this. Till now, none of our member operators has informed us of any impact on prepaid recharges because of the cash crunch,” said Rajan Mathews, director general of the Cellular Operators Association of India, which represents Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm.

Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio did not reply to ET’s queries as of press time.

Another factor that may be responsible for the drop in footfalls is the longer validity period of some packs.

“It would be difficult to immediately assess the impact of the cash crunch as overall footfalls for monthly recharges have shrunk with a sizeable chunk of prepaid users opting for packs priced at roughly Rs 500 with three-month validity periods,” a customer care executive at a Vodafone India retail store said.